Benchmark Comparison – Version 1

I’ve chosen the iShares FTSE 100 as my benchmark as it’s about as near as you’re going to get to holding the FTSE 100 directly.  It’s also easy to calculate total returns (returns assuming dividends are reinvested automatically) as they have a nice table of 1, 3 and 6 month returns, and 1, 3 and 5 year returns.

I don’t like the idea of setting target returns since I cannot control those returns.  I only like to target things I can actually have an influence on, like winning races at a kart track, or swimming 20 lengths of a pool. 

However, given that I am investing my money through stock picking I must think I can outperform (on a risk adjusted basis) the FTSE 100, otherwise I’d just hold that iShares ETF.  So, on that basis I am forced to have some kind of goal, which I have subtly outlined below:

My investing goal is to beat the iShares FTSE 100’s total return over any given 5 year period

I’ll post a table, updated monthly, comparing my 1, 3 and 6 month and 1, 3 and 5 year returns against my benchmark.  May the best theory win.

Author: John Kingham

I cover both the theory and practice of investing in high-quality UK dividend stocks for long-term income and growth.

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